What’s New

What’s New

Canadian inflation, as measured by the Consumer Price Index (CPI), registered 2 per cent in the twelve months to December, a slight uptick from 1.7 per cent in November. Lower energy prices were offset by an increase in air transportation, and telephone services. Excluding the impact of falling gasoline prices, consumer prices were up 2.5 per cent. The Bank of Canada’s three measures of trend inflation were all unchanged, averaging 1.9 per cent. In BC, provincial consumer price inflation was 3 per cent in the 12 months to December.

With core inflation trending sideways and the economy expected to slow this year, the odds of further Bank of Canada tightening this year are diminishing, which is being reflected by lower 5-year yields in the Canadian bond market. That should result in a dip in Canadian mortgage rates relatively soon, which would provide a much needed boost to a housing market still struggling with the impact of the mortgage stress test.

– November 8, 2018Canadian housing starts increased 9 per cent on a monthly basis in October to 205,925 units at a seasonally adjusted annual rate (SAAR). The trend in Canadian housing starts continued to moderate lower, averaging 206,000 units SAAR over the past six months.

In BC, total housing starts rebounded slightly in October after a sharp September decline. Total starts were up 17 per cent to 29,861 units SAAR and but were still down 45 per cent year-over-year. On a monthly basis, starts of multiple units were up 30 per cent to 25,464 units SAAR while single detached fell 8 per cent to 7,784 units SAAR. Compared to October 2017, multiple units starts were down 51 per cent while single detached starts were 22 per cent lower.

Looking at census metropolitan areas (CMA) in BC:

Total starts in the Vancouver CMA bounced back somewhat in October, rising 26 per cent on a monthly basis to 14,238 units SAAR as multiple units starts rose 41 per cent from September. However, starts have been trending lower for the past few months and were down 49 per cent compared to October 2017. Most new construction activity in October was concentrated in the City of Vancouver, which accounted for over half of all starts in the Metro Vancouver area.

In the Victoria CMA, housing starts fell 12 per cent in October to 2,728 units SAAR but were 71 per cent down year-over-year. However, on a year-to-date basis, housing starts in Victoria are just 6 per cent below the record level set in 2017.

In the Kelowna CMA, new home construction remained slow in October, falling 7 per cent to just 629 units SAAR. On a year-over-year basis, total starts were down 64 per cent to just 62 total units. While housing starts in Kelowna have fallen off of the record pace of 2017, they remain on pace to finish above the 10-year average for the city.

Housing starts in the Abbotsford-Mission CMA nearly tripled from September to 1,734 units SAAR due to 120 new multiple unit starts in October. On a year-over-year basis, starts were 22 per cent higher.

Canadian housing starts declined 5 per cent on a monthly basis in September to 188,683 units at a seasonally adjusted annual rate (SAAR). The trend in Canadian housing starts continued to moderate lower, averaging 208,000 units SAAR over the past six months.

It was a volatile month for new home construction in BC. Total housing starts fell 43 per cent on a monthly basis to 25,611 units SAAR and were down 31 per cent year-over-year. On a monthly basis, starts of multiple units were down more than half from August to just 16,980 units SAAR while single detached fell 3 per cent to 8,631 units SAAR. Compared to September 2017, multiple units starts were down 37 per cent while single detached starts were 20 per cent lower.

Looking at census metropolitan areas (CMA) in BC:

Total starts in the Vancouver CMA were down 42 per cent on a monthly basis to 14,390 units SAAR as multiple units starts dropped 50 per cent from August. Compared to this time last year, total starts in Vancouver were 21 per cent lower. September new home construction in Metro Vancouver was concentrated in Surrey which accounted for a quarter of all starts.

In the Victoria CMA, housing starts fell 56 per cent after a surge of new starts in August. Total housing starts were still on a 3,000 annual pace in September. That is well below the torrid pace of new home construction seen in Victoria over the past year, but still relatively strong.

In the Kelowna CMA, new home construction slowed substantially in September, falling to just 750 units SAAR from August’s near 4,000 unit annual pace. On a year-over-year basis, total starts were down 84 per cent to just 67 total units. Housing starts in Kelowna have fallen off of the record pace of 2017, but remain above the 10-year average for the city.

Housing starts in the Abbotsford-Mission CMA rose 23 per cent on a monthly basis, driven by a 44 per cent increase in multiple unit projects and strong single-detached starts. However, total housing starts were down 80 per cent compared to last September, which saw very strong multiple unit starts.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 1,929 in August 2018, a 36.6 per cent decrease from the 3,043 sales recorded in August 2017, and a 6.8 per cent decline compared to July 2018 when 2,070 homes sold.

Last month’s sales were 25.2 per cent below the 10-year August sales average.

“Home buyers have been less active in recent months and we’re beginning to see prices edge down for all housing types as a result,” Phil Moore, REBGV president said. “Buyers today have more listings to choose from and face less competition than we’ve seen in our market in recent years.”

There were 3,881 detached, attached and apartment homes newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in August 2018. This represents an 8.6 per cent decrease compared to the 4,245 homes listed in August 2017 and an 18.6 per cent decrease compared to July 2018 when 4,770 homes were listed.

The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 11,824, a 34.3 per cent increase compared to August 2017 (8,807) and a 2.6 per cent decrease compared to July 2018 (12,137).

The sales-to-active listings ratio for August 2018 is 16.3 per cent. By housing type, the ratio is 9.2 per cent for detached homes, 19.4 per cent for townhomes, and 26.6 per cent for apartments.

Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.

“With fewer buyers active in the market, benchmark prices across all three housing categories have declined for two consecutive months across the region,” Moore said.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,083,400. This represents a 4.1 per cent increase over August 2017 and a 1.9 per cent decrease since May 2018.

Sales of detached properties in August 2018 reached 567, a 37.1 per cent decrease from the 901 detached sales recorded in August 2017. The benchmark price for detached properties is $1,561,000. This represents a 3.1 per cent decrease from August 2017 and a 2.8 per cent decrease since May 2018.

Sales of apartment properties reached 1,025 in August 2018, 36.5 per cent decrease compared to the 1,613 sales in August 2017. The benchmark price of an apartment property is $695,500. This represents a 10.3 per cent increase from August 2017 and a 1.6 per cent decrease since May 2018.

Attached property sales in August 2018 totalled 337, a 36.3 per cent decrease compared to the 529 sales in August 2017. The benchmark price of an attached unit is $846,100. This represents a 7.9 per cent increase from August 2017 and a 0.8 per cent decrease since May 2018.

Vancouver, BC – August 30, 2018. The BCREA Commercial Leading Indicator (CLI) recovered in the second quarter following a rare first quarter decline. The index rose 1.9 points to an index level of 135.4. That increase represents a 1.4 per cent rise from the first quarter of 2018. The index is 2.7 per cent higher than this time one year ago.

Vancouver, BC – August 13, 2018. The British Columbia Real Estate Association (BCREA) reports that a total of 7,055 residential unit sales were recorded by the Multiple Listing Service® (MLS®) across the province in July, a 23.9 per cent decrease from the same month last year. The average MLS® residential price in BC was $695,990, down 0.4 per cent from July 2017. Total sales dollar volume was $4.9 billion, a 24.2 per cent decline from July 2017.

“The BC housing market continues to grapple with the sharp decline in affordability caused by tough new mortgage qualification rules,” said Cameron Muir, BCREA Chief Economist. “However, less frenetic housing demand has created more balanced market conditions in many regions, leading to fewer multiple offers and more choice for consumers.”

Year-to-date, BC residential sales dollar volume was down 18.9 per cent to $37 billion, compared with the same period in 2017. Residential unit sales decreased 20.6 per cent to 50,926 units, while the average MLS® residential price was up 2.1 per cent to $725,639.

Canadian real GDP rose 0.5 per cent in May, an acceleration from just 0.1 per cent growth in the month of April. Growth was distributed across a breadth of sectors, with 19 of 20 industrial sectors reporting increased output. The mining and oil and gas sector led the way, posting 0.6 per cent monthly growth in May. Office of real estate agents and brokers fell for the fourth time in five months, in part due to declining home sales in BC resulting from the ongoing impact of the mortgage stress test. With today’s release, we are tracking second quarter real GDP growth in Canada at close to 3 per cent.

Very strong second quarter economic growth and a firming of inflation near its 2 per cent target continues to signal higher interest rates on the horizon. We expect the Bank of Canada will raise its overnight rate at least one more time this year with mortgage rates rising in tandem.

Commercial real estate sales in the Lower Mainland declined in the first quarter (Q1) of 2018 compared to the active market experienced in the region last year.

There were 523 commercial real estate sales in the Lower Mainland in Q1 2018, a 10.8 per cent decrease over the 586 sales in Q1 2017, according to data from Commercial Edge, a commercial real estate system operated by the Real Estate Board of Greater Vancouver (REBGV).

The total dollar value of commercial real estate sales in the Lower Mainland was $3.031 billion in Q1 2018, a 38.5 per cent decrease from the $4.927 billion in Q1 2017.

“Our commercial market returned to more historically normal levels in the first quarter of the year compared to the heightened activity we experienced in 2017,” Phil Moore, REBGV president said. “This shift to more typical activity is mirroring the overall economic trends we’re seeing in our province today.”

Q1 2018 activity by category

Land: There were 221 commercial land sales in Q1 2018, which is a 3.9 per cent decrease from the 230 land sales in Q1 2017. The dollar value of land sales was $1.594 billion in Q1 2018, a 20.5 per cent decrease from $2.005 billion in Q1 2017.

Office and Retail: There were 173 office and retail sales in the Lower Mainland in Q1 2018, which is down 15.6 per cent from the 205 sales in Q1 2017. The dollar value of office and retail sales was $1.076 billion in Q1 2018, a 51.8 per cent decrease from $2.232 billion in Q1 2017.

Industrial: There were 113 industrial land sales in the Lower Mainland in Q1 2018, which is down 7.4 per cent from the 122 sales in Q1 2017. The dollar value of industrial sales was $0.280 billion in Q1 2018, a 12.2 per cent increase over $0.250 billion in Q1 2017.

Multi-Family: There were 16 multi-family land sales in the Lower Mainland in Q1 2018, which is down 44.8 per cent over the 29 sales in Q1 2017. The dollar value of multi-family sales was $0.081 billion in Q1 2018, an 81.5 per cent decrease from $0.441 billion in Q1 2017.

Canadian housing starts fell 5 per cent on a monthly basis in April to 214,379 units at a seasonally adjusted annual rate (SAAR). The six-month trend in Canadian housing starts was steady at about 226,000 units SAAR.

In BC, total housing starts declined 17 per cent on a monthly basis to 38,750 units SAAR and were down 11 per cent year-over-year. Multiple unit starts were down 10 per cent year-over year and 21 per cent month-over-month while single detached starts were down 11 per cent year-over-year and were flat compared to March.

Looking at census metropolitan areas (CMA) in BC:

Total starts in the Vancouver CMA were down 28 per cent monthly basis to 23,366 units SAAR. Year-over-year, Vancouver starts were down 21 per cent.

In the Victoria CMA, housing starts were down 8 per cent on a monthly basis. Although single detached starts were nearly double the previous month, a 26 per cent decline in multiple unit starts resulted in an overall decline in new home construction. Year-over-year, total starts were up 26 per cent.

In the Kelowna CMA, new home construction doubled on a monthly basis due to a surge in multiple unit starts. However, total starts were down 5 per cent compared to April 2017.

Housing starts in the Abbotsford-Mission CMA fell 66 per cent compared to March due to large declines in both single detached and multiple unit starts. Year-over-year, total housing starts were also down 66 per cent.

Canadian retail sales increased 0.3 per cent on monthly in basis in January and were 3.6 per cent higher compared to last January. Sales were higher in 7 of 11 sub-sectors representing 63 per cent of total retail trade. With today’s data, and all other data available thus far for the first quarter, we are tracking Canadian economic growth at just 0.9 per cent for the first quarter of 2018. In BC, after growing nearly 10 per cent in 2017,retail sales growth has slowed, falling 1 per cent on a monthly basis in January but rising 6.2 per cent compared to January 2017.

Canadian inflation, as measured by the Consumer Price Index (CPI), jumped higher in February, registering 2.2 per cent year-over-year, up from 1.7 per cent in January. The Bank of Canada’s three measures of trend inflation were all higher as well and now are either very close to or exceeding the Bank’s 2 per cent inflation target. In BC, provincial consumer price inflation was 2.8 per cent in the 12 months to February.

Today’s data is somewhat mixed in its impact on monetary policy in Canada. On the one hand, the Canadian economy appears to be slowing considerably, while on the other, inflation continues to close in on the Bank’s target of 2 per cent. We believe the Bank will continue to hold interest rates steady until summer or fall to get a better grasp on the direction of the economy before acting.